May 2002 and HP and Compaq ‘merge’ their technology operations. In one of the largest deals in the entire history of the technology sector, Hewlett Packard bought Compaq in a stock swap worth about $25 billion.
On 28 April 2010, it was announced that HP would be acquiring Palm for $1.2 billion in cash and debt, so there goes over a $26 billion investment. That’s a HUGE number and roughly the equivalent of the Gross Domestic Product of Latvia (according to IMF world GDP figures 2010), but HP plans to ‘exit’ from this apparently wrong strategy.
Leo Apotheker the CEO at HP has his roots deep in SAP, the German software services giant, and knows and understands the benefits of being software-driven rather than hardware-focused. With Apple now dominating the PC market (if you count a tablet device as a PC) then HP are now second and Dell third and neither of them have a credible answer to that Apple domination.
For many years software was the hardware driver, and companies regularly needed to update their kit in 18 month to 2 year cycles just to be able to run the latest bloated offerings from the likes of Microsoft. However nowadays hardware seems to have become much more stable and without this constant pressure to upgrade, so a much more realistic upgrade cycle is now 4 – 5 years.
Hardware technology is still progressing with smaller, faster, less power-hungry processors being released regularly by Intel and AMD, thus enabling smaller, faster and lighter handheld and portable devices. But Apple has stolen the mantle of the top technology company and the cost and probability of competitors managing to steal that away from it gets more and more unlikely.
So in the same week that we see Google announcing that they are buying Motorola Mobile for $12.5 billion, we also have HP divesting itself of its once flagship line up of desktop and laptop PC products. Is it me, has one of these behemoths of the digital age got it all wrong?
I suppose with hindsight we are all seers — you know, the sort of guy that was a lone voice in the wilderness crying out that there was something wrong with the banking system 18 months before it all came crashing down – but no one was listening! Boy was he right in hindsight!
When IBM sold its PC division to Lenovo in China, I suspect that executives there were glad to see the back of a difficult (for them) to sell product line and they have successfully refocused their business back into enterprise software applications and the corporate marketplace.
Lenovo re-branded the product line and continued to develop and promote a strong brand image as well as grow their market share, proving that people and companies do actually need a platform for their enterprise software solutions.
At the end of the day somebody has to make something, somewhere or there is absolutely no need for software to run businesses. If we are not making things then suddenly we will have nothing to sell. If the underpinning foundations of any company are built on vision and ‘enterprise’ then surely they are built on sand.
I believe vehemently that we have to live in a manufacturing society or the drive to push technology to its limits dies, the ability to create wealth dies and our society dies.